The Aftermath of Boohoo’s Acquisitions

May 11, 2018

Anna

Boohoo is unstoppable. The UK-based online fashion retailer has seen soaring sales and share prices over the past year, catering to a younger demographic with its relatively low prices and on-trend collections. Known as ultra-fast fashion, their business hinges upon the “test and repeat” model, which meant market-testing a wide range of items on its site and reordering products that sell best.

By manufacturing half of its products in the UK, the firm says it can offer typical turnaround times for new styles of about four to six weeks. If that was not enough, the acquisition of UK label PrettyLittleThing in December 2016 followed by almost-defunct LA-based Nasty Gal just two months after signified the umbrella brand’s dominance in the youth market.

While some acquisitions may be questionable, Boohoo’s move was a stroke of genius as group profits doubled and operating profits rose 101% from £15m to £30.3m in 2017.

omnilytics retail data boohoo market share price

Source: WebFG – 25th April, 2018

Let’s take a closer look at these acquisitions and how far they have come.

Same Same But Different

One thing that Boohoo, PrettyLittleThing and Nasty Gal had in common were dresses seemed to reign supreme as a best-selling category. While all three brands focused on the “millennial & beyond” crowd, each of their styles, however, were far from identical.

omnilytics boohoo collection on shopprapp

Source: Boohoo’s collection on shopprapp.com

Boohoo retained a stronghold on fairly provocative, “out there” styles, featuring clubbing-esque bodycon dresses that fits like second skin. When they acquired PrettyLittleThing, it boosted their sexy collection from a ‘grinding at a club’ vibe to ‘partying in style’, aimed at the Kylie Jenner wannabes with lots of lace thrown in the mix (shown below).

omnilytics prettylittlething collection on shopprapp

Source: PrettyLittleThing’s collection on shopprapp.com

Their name might suggest differently but Nasty Gal had always been popular with cool and edgy styles with a touch of bohemian rhapsody thrown in the mix. And it remained so, even after Boohoo’s intervention.

omnilytics nasty gal collection on shopprapp

Source: Nasty Gal’s collection on shopprapp.com

Nevertheless, it’s important to note that Boohoo, PrettyLittleThing and Nasty Gal are three separate identities for three different young women.

Joint Chief Executive Carol Kane told Drapers Online, “Boohoo is striving to keep the identities of its three brands separate so as not to confuse customers.”

Off The Charts Potential

And they have done well so far, with Boohoo’s revenue increasing by 51% in 2017 to about $321 million, while profits surged 97% to $40 million. What does data say about the performances for all three brands over the past 8 months from August 01, 2017 – March 31, 2018?

omnilytics retail data sellout and replenishment rate boohoo, nasty gal, pretty little thing

 

Looks promising, doesn’t it? From the bar chart above, we can deduce that:

  1. All three brands had rather similar and above average sellout and replenishment rates, in accordance to their number of SKUs.

  2. Boohoo had the best performance as they sold out 66.7% of 60,699 SKUs.

  3. PrettyLittleThing had the highest replenishment rate, indicating that they were selling well and required constant restocking of style, sizes or colours.

Having said all that, did the trio resort to rampant discounting practices?

omnilytics oercentage of sold out SKUs on discount retail data boohoo nasty gal pretty little thing

 

Not at all. PrettyLittleThing seemed to be sitting prettily above the other two brands with the lowest percentage of discounted SKUs that were sold out. This could mean they are meeting the needs of their target customers, hence were able to sell out without needing extensive promotions. The chart below will further prove how insignificant their discounting practices were.

omnilytics retail data discount ranges boohoo, nasty gal, pretty little thing

 

Only a meager amount of PrettyLittleThing SKUs were discounted in the 60-64% range. On the other hand, while Boohoo seemed to cover a wide discount bracket, a majority was at the low 20-24% range. Certainly not too shabby for a retailer who just acquired two popular brands in two months and have over 50,000 products under their belt.

However, the test was primarily in Nasty Gal that was bankrupt at the point of acquisition.

Revival of Nasty Gal

From the charts above, even though they did sell a decent percentage of SKUs, they also sold 47.3% of those SKUs at a high discount range of 40-44%. However, this is considered a far cry from their prior destitution and a victory for Boohoo.

“It represents an exciting opportunity to accelerate our international offering and inspire an ever-growing range of young customers in the US and around the world,” said joint CEOS of Boohoo, Kane and Mahmud Kamani.

The failure of Nasty Gal was entwined in production, planning and logistics but the tables seemed to have turned for the better with above average sellouts as shown earlier. Boohoo is a misnomer in this case, because certainly their current success is no reason to cry. For now, at least.

Thinking of acquiring or growing your acquired brands? Drop us an email at info@omnilytics.co and we’ll be in touch!

The data above was obtained from Omnilytics, real-time retail data platform. The numbers and statistics may vary, as the platform is updated every day. The time period of the information taken was between 1st August, 2017 to 31st March, 2018.